ACIT 9(3), MUMBAI V. SAY INDIA JEWELLERS P. LTD, MUMBAI

ITA 6735/MUM/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8023 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 22-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURALI
• Keywords: Bogus purchase
• Section: 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI , ! '# $ $ $ $ , % && , , '# ' BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUICIAL MEMBER ./ I.T.A. NO.6735/MUM/2010 ( ( ( ( ( / ASSESSMENT YEAR :2006-07 THE ACIT, CIRCLE-9(3), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. SAY INDIA JEWELLERS PVT. LTD., DYNAMIX HOUSE, YASHODHAM, GEN. A.K. VAIDYA MARG, GOREGAON (E), MUMBAI-400 063 #) ! ./ %* ./ PAN/GIR NO. : AAACM 7171K ( )+ / APPELLANT ) .. ( ,-)+ / RESPONDENT ) )+ . / APPELLANT BY: SHRI M. MURALI ,-)+ / . / RESPONDENT BY: SHRI AARTI VISANJI / 01! / DATE OF HEARING :05.08.2014 23( / 01! / DATE OF PRONOUNCEMENT :08.08.2014 '4 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST T HE ORDER OF THE LD. CIT(A)-20, MUMBAI DT. 26.7.2010 PERTAINING TO A .Y.2006-07. 2. THE GRIEVANCES OF THE REVENUE READ AS UNDER: ITA NO. 6735/M/2010 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITI ON OF RS. 1,27,98,022/- RELATING TO BOGUS PURCHASES FROM M/S. ZALAK IMPEX, DESPITE EVIDENCE AVAILABLE, INTER ALIA, IN THE FORM OF DEPOSITION OF SHRI HITEN RAVAL TO THE EFFECT THAT THE ASSESSEE WAS PROVIDED ONLY ACCOMMODATION ENTITIES AND THAT NO GENUINE PURCHASES WERE MADE FROM M/S. ZALAK IMPEX. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A)FAILED TO APPRECIATE THAT THE DEPOSITION OF SHRI HITEN RAWAL CONSTITUTES EVIDENCE AGAINST THE ASSESSEE, WHICH HAS NOT BEEN REBUTTED B Y THE ASSESSEE DESPITE ADEQUATE OPPORTUNITIES GIVEN. 3. THE ASSESSEE IS A MANUFACTURER OF STUDDED JEWE LLERY. RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED O N 22.11.2006 DECLARING TOTAL INCOME AT RS. 1,72,15,725/-. THE A SSESSMENT WAS COMPLETED ON 18.12.2008. THE ASSESSEES TOTAL INCO ME WAS RS. 1,80,52, 937/-. THE ASSESSMENT WAS REOPENED U/S. 147 OF THE ACT. THE REASON FOR REASSESSING THE INCOME WAS PROVIDED TO THE ASSESSEE . THE ASSESSMENT WAS REOPENED ON THE BASIS OF AN INTIMATION RECEIVED FR OM ITO-25(2)(1), MUMBAI STATING THAT SHRI HITEN L. RAVAL, PROPRIETOR OF M/S. ZALAK IMPEX INDULGED IN ISSUING BOGUS BILLS, PROVIDING ACCOMMOD ATION ENTRIES IN THE FORM OF SALES & PURCHASES AND DURING THE COURSE OF THE SURVEY AT THE PREMISES OF SHRI HITEN L. RAVEL WHERE IT HAS BEEN M ENTIONED THAT THE ASSESSEE IS ONE OF THE BENEFICIARIES OF BOGUS BILLS . TAKING A LEAF OUT OF THIS, THE AO ASKED THE ASSESSEE TO SUBSTANTIATE THE CLAIM OF PURCHASE FROM M/S. ZALAK IMPEX AGGREGATING TO RS. 1,27,38,022/-. 3.1. THE ASSESSEE SUBMITTED THE DETAILS OF CUT AND POLISHED DIAMONDS EXPORTED DURING THE YEAR. IT WAS ALSO POINTED OUT TO THE AO THAT THE PURCHASES MADE FROM M/S. ZALAK IMPEX WERE SOLD TO M /S. ADIN INTERNATIONAL INC, SALE BILLS WERE ALSO SUBMITTED. THE AO DID NOT ACCEPT ITA NO. 6735/M/2010 3 THE SUBMISSION AND THE DETAILS FILED BY THE ASSESSE E. THE AO OBSERVED THAT THE ASSESSEE IS WELL AWARE OF THE FACT THAT IT S PURCHASES ARE BOGUS IN NATURE. THE AO FURTHER NOTICED THAT THE ASSESSEE W AS ENGAGED IN OBTAINING BOGUS PURCHASE BILLS IN EARLIER YEAR ALSO . THE AO COMPLETED THE ASSESSMENT PROCEEDINGS BY MAKING ADDITIONS ON A CCOUNT OF BOGUS PURCHASES AT RS. 1,27,98,022/-. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND REITERATED ITS CLAIM THAT PURCHASES WERE GENUINE, THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUE AND THE PURCHASED DIAMONDS WERE SUBSEQUENTLY EXPORTED, THE DETAILS OF WHICH WERE FILED BEFORE TH E AO . THE RELATED INVOICES WERE ALSO PRODUCED BEFORE THE LD. CIT(A). AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND THE RELATED DOCUMENTS , THE LD. CIT(A) OBSERVED THAT AS PER THE DETAILS SUBMITTED TO THE A O, THERE WAS PHYSICAL MOVEMENT OF CUT AND POLISHED DIAMONDS PURCHASED FRO M M/S. ZALAK IMPEX. THE PAYMENTS FOR PURCHASES WERE MADE THROUG H BANKING CHANNELS. THERE IS NO FINDING THAT THE ASSESSEE GO T THE MONEY BACK IN M/S. ZALAK IMPEX, THEREFORE THE IMPUGNED PURCHASES CANNOT BE HELD BOGUS ON MERE ASSUMPTION. THE LD. CIT(A) FURTHER O BSERVED THAT THE ASSESSEE HAS ISSUED FORM NO. H TO M/S. ZALAK IMPE X IN RESPECT OF THE PURCHASES MADE FROM THEM CERTIFYING THAT THE GOODS SO PURCHASED WAS EXPORTED. THE EXPORT WAS DOCUMENTED AT VARIOUS FOR UMS CULMINATING IN REMITTANCE OF CONVERTIBLE FOREIGN EXCHANGE THROUGH BANKING CHANNELS. THE LD. CIT(A) FURTHER OBSERVED THAT IN RESPECT OF EXPORTS TO M/S. ANDIN INTERNATIONAL, THE AO HAS ASSUMED THAT THE EX PORT WAS MADE FROM UNACCOUNTED PURCHASES. THE LD. CIT(A) FINALLY CONC LUDED BY STATING THAT THERE IS NO CREDIBLE BASIS FOR THE AO TO HOLD THE PURCHASES MADE FROM M/S. ZALAK IMPEX AS BOGUS AND DELETED THE ADDITION OF RS. 1,27,98,022/-. ITA NO. 6735/M/2010 4 5. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED TH E FINDINGS OF THE AO. 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATIVE WHA T HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND THE RELEVANT MATERIAL EVIDENCES BROUGHT ON RECORD B EFORE US. THE UNDISPUTED FACTS ARE THAT THE PURCHASES WERE SUPPOR TED BY BILLS, THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUE AND THE PAYMENTS WERE DULY REFLECTED IN THE BANK STATEMENT OF THE ASSESSE E. A PERUSAL OF THE STATEMENT OF THE DIAMOND TRADED DURING THE YEAR UND ER CONSIDERATION SHOWS THAT THE ASSESSEE PURCHASED 1358.54 CARATS FR OM M/S. ZALAK IMPEX ON 1.8.2005, THE SAME WAS EXPORTED ON 5.8.2005 AND 871.57 CARATS WERE PURCHASED ON 2.8.2005 FROM M/S. ZALAK IMPEX AND WER E EXPORTED ON 12.8.2005. NO ADVERSE INFERENCES HAVE BEEN DRAWN B Y THE AO IN SO FAR AS EXPORTS OF DIAMONDS ARE CONCERNED. WITHOUT PURC HASES THERE CANNOT BE ANY SALES. THE ENTIRE ADDITIONS MADE BY THE AO ARE BASED ON ASSUMPTIONS AND PRESUMPTIONS. WE, THEREFORE, DECLINE TO INTERF ERE WITH THE FINDINGS OF THE LD. CIT(A). 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST, 2014 SD/- SD/- (SANJAY GARG ) (N.K. BILLAIYA) '# / JUDICIAL MEMBER ! '# / ACCOUNTANT MEMBER MUMBAI; 5' DATED : 8 TH AUGUST, 2014 . . ./ RJ , SR. PS ITA NO. 6735/M/2010 5 '4 '4 '4 '4 / // / ,0 ,0 ,0 ,0 6(0 6(0 6(0 6(0 / COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,-)+ / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 8& ,0 , , / DR, ITAT, MUMBAI 6. &9 : / GUARD FILE. '4 '4 '4 '4 / BY ORDER, -0 ,0 //TRUE COPY// ; ;; ; / < < < < % % % % (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI